Corporate Owned Life Insurance (COLI) in Calgary: Understanding the Basics

 

What is Corporate Owned Life Insurance (COLI) in  Calgary?

COLI is a type of insurance policy taken out by companies on the lives of their employees, executives, or business owners. The policy pays a death benefit to the company upon the death of the insured individual. The company is both the owner and the beneficiary of the policy.

Corporate Owned Life Insurance in Calgary can be a valuable tool for companies looking to protect their financial interests, offset potential losses, and provide death benefits to employees or their families. In this blog post, we will explore the basics of COLI, its benefits and drawbacks, and how it works in Calgary.

Benefits of Corporate Owned Life Insurance:

1. Death Benefit: The most significant advantage of COLI is the death benefit paid to the company upon the death of the insured individual. The death benefit can help to offset losses and provide financial stability for the company.
2. Employee Benefits: COLI can also provide benefits for employees and their families. For example, if the policy covers key employees, their death could result in a significant loss to the company, but with COLI in place, the death benefit could help to mitigate this loss.
3. Tax Benefits: In some cases, COLI can provide tax benefits for companies. For example, death benefits paid to a company are generally tax-free, and the premiums paid for COLI policies are tax-deductible.
4. Flexibility: COLI can be structured in a variety of ways to meet the unique needs of each company. For example, companies can choose the amount of coverage they need, the type of policy, and the individuals to be insured.

Drawbacks of Corporate Owned Life Insurance in Calgary

• Complexity: COLI is a complex financial instrument and can be difficult to understand. Companies need to have a clear understanding of their needs and the potential benefits and drawbacks of COLI before they decide to purchase a policy.
• Cost: COLI policies can be expensive, and companies need to factor in the cost of the premiums when deciding whether or not to purchase a policy.
• Legal and Regulatory Issues: COLI policies are subject to various laws and regulations, and companies need to be aware of these requirements when deciding whether or not to purchase a policy.
• Public Perception: In some cases, the use of COLI can be perceived negatively by employees, customers, and other stakeholders. Companies need to consider how COLI might be perceived and whether it might impact their reputation.

How Corporate Owned Life Insurance Works in Calgary

• Choosing a Policy: Companies need to choose the type of COLI policy that best meets their needs. For example, they might choose a term life policy, a permanent policy, or a combination of both.
• Insuring Employees: Companies can choose which employees to insure under a COLI policy. For example, they might choose to insure key employees, executives, or business owners.
• Premium Payments: Companies will need to make premium payments to keep the policy in force. The amount of the premium will depend on various factors, including the amount of coverage, the type of policy, and the age and health of the insured individuals.
• Death Benefit: Upon the death of an insured individual, the company will receive a death benefit. The death benefit can be used to offset losses, provide financial stability, or provide benefits to employees or their families.

Corporate Owned Life Insurance (COLI) can provide a range of benefits for registered financial planner in Calgary, including a death benefit to offset losses, benefits for employees, tax benefits, and flexibility. However, COLI is a complex financial instrument and companies need to be aware of its potential drawbacks, including the cost of premiums, legal and regulatory issues, and public perception. When deciding whether or not to purchase a COLI policy, companies need to consider their specific needs and circumstances. 

They should carefully consider the benefits and drawbacks, choose a policy that meets their needs, and make sure they understand the requirements and obligations of the policy. It's also important for companies to work with experienced and knowledgeable insurance professionals when selecting and implementing a COLI policy. An experienced insurance professional can help companies understand the complexities of COLI and make informed decisions about the best policy for their needs. 

In conclusion, Corporate Owned Life Insurance (COLI) can be a valuable tool for companies in Calgary looking to protect their financial interests and provide death benefits to employees or their families. However, it's essential to understand the basics of COLI, its benefits and drawbacks, and how it works in order to make an informed decision about whether or not it's right for your company.